Merging Firms with Different Cultures

mergersMergers are still in the air – law firms, accounting firms, banks, even stock exchanges! Yet we all know that most mergers fail to deliver added value. One of the main reasons attributed to these failures is that the merging entities have different cultures and that integration is not handled well.

The following process has been designed by my Lumina Consulting partner Simon Allen and colleagues, using original thoughts developed by Barry Oshry (see http://www.powerandsystems.com). The process brings about a shared culture in the new firm. It encourages both sides to share their thoughts and feelings and most importantly both sides create the values and working practices of the new firm.

Here is an outline of the process to be used by a facilitator with further details below:

1: Define the cultures in legacy firms – One definition of culture is ‘what you stop noticing about a place after you have been there six months’…it’s the set of taken- for-granted-assumptions, mind sets and meanings that collectively reveal ‘the way things are around here’. Acknowledging and sharing the legacy cultures is an important first step. 

2: Share the legacy cultures 

3: Agree the purpose of the merged firm – ‘But what culture do we need going forward?’ This question needs to be examined in the context of the future purpose of the firm. 

4: Shift from legacy cultures to the new desired culture 

5: Develop the new culture going forward 

6: Reinforce the new culture and behaviours

Here are further guidelines for facilitators to use:

Phase 1: Define the cultures in legacy firms – work in original legacy firms:

A) Describe the values of your firm. (Note to facilitator; this makes it easy to see the priorities of each firm.)

B) Describe what is unique and special about your firm? Highlights achieved? What are your key behavioural norms? What are you proud of? (Note to facilitator: this is their culture in their own words. Aim here is for each firm to do a real boasting job.)  

C) Where do you have real or imagined difficulties with the other firm? What is the source of that difficulty? And what is the value of them? What don’t we understand about them? (Note to facilitator: the aim here is to get differences and issues articulated and also to see that differences can have value.)

 Phase 2:  Share the legacy cultures – working all together

A) Share the unique and special cultures of each firm.

  • Share what you value about each other firm.
  • State what you are proud of about your own firm.

B) What don’t you understand about the other firm?

  • State areas of non-understanding and seek responses.

Phase 3: Agree the purpose of the partnership/ merged firms – all working together  

A) What is the mission and purpose of this new firm? (Note to facilitator: it is likely that firms will have some common and some different understandings – depending on their own priorities. The aim here is to develop agreed understanding as to the purpose …..and from that start to develop ideas around vision, strategy, aims, objectives and action plans to inform the working structure and process of the new firm.)

  • Each firm share why they think they are here.
  • Identify the common ground on the purpose and build on this to develop a vision, ideas for strategy and action plans.

B) What do we need to be doing to deliver this purpose?

  • What values and behaviours are going to be needed to develop this purpose?

Phase 4. Shift from legacy cultures to the new desired culture – work in original legacy firms

A) Given 3 A) and 3 B) above, what of our legacy values and culture would we want to preserve and protect? And what of the other legacy culture would we want to allow and adapt?

B) Generate some behavioural proposals and ideas for working together in the future to make the new firm succeed.

Phase 5. Develop the new culture going forward – all working together

A) Join together and share 4A) and 4 B). Identify the common ground. These then become statements as to how the entities are going to work together. They should ultimately be seen as enshrined commitments.

B) Explore the different views.

C) Explore and decide processes for dealing with the differences.

Phase 6: Reinforce the new culture and behaviours – all working together

Agree processes for acknowledging and noticing the new behaviours. e.g. Informally via personal appreciations, e-mail etc.

Consider formally reviewing behaviours as an agenda item for team meetings and conference calls.

Consider adding appropriate sections on the firm’s intranet site etc.

Most newly merged firms get themselves snazzy new logos, but fail to address the issues of building a shared new culture. Try this process out – I know it works.

For more on merger failures see https://tonyreiss.com/2012/05/16/why-most-mergers-fail-to-deliver-on-their-promises/

For more information about Simon and Lumina Consulting see http://www.luminaconsulting.com/

Advertisements
This entry was posted in Leadership and Management, Managing Change and tagged , , , , . Bookmark the permalink.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s